The Economist: Texas travel

March 3, 2012 at midnightUpdated March 2, 2012 at 9:03 p.m.

By Ray Perryman

Any spending generates multiplier effects throughout the economy. Such direct expenditures (whether business investment, consumer spending or government outlay) lead to spillover benefits for a wide range of businesses.

I have analyzed these economic relationships for the better part of three decades; I developed a model in the early 1980s which captures the linkages among industries and allows us to quantify the total economic benefits of any given direct stimulus. We've looked at everything from large mixed-use real estate developments to regulatory changes to new corporate locations.

Like with any direct spending, when people travel to Texas for business or pleasure, the economy benefits. Hotels, restaurants, retail establishments and others see increased sales; the positive effects ripple through the economy.

Food service providers, landscapers, accounting offices, law firms, security companies and all the rest who supply necessary input goods and services are positively affected. Payrolls up and down the line lead to higher consumer spending.

Visitor spending benefits communities and companies across the state, some directly and some less so. The recent recession naturally crimped spending. However, since 2010 the number of tourists coming to Texas has been increasing again and the contribution of tourism to the Texas economy is trending back to levels seen prior to the recession.

Some 198 million people visited Texas in 2010, up 6.5 percent from 2009, according to the Office of the Governor, Economic Development and Tourism. Travel-related spending in 2010 was $57.5 billion. About 30 percent traveled for business and 70 percent for leisure in 2010.

Many leisure visitors come from out of state with the largest percentage (9.3 percent) coming from Oklahoma City and 5.9 percent from Albuquerque-Santa Fe, New Mexico; 4.7 percent of leisure travelers to Texas originate from Los Angeles.

International travelers to Texas represented about 7.4 million of the total in 2010, spending about $4.3 billion. The vast majority of the international visitors to Texas were from Mexico, with 6.3 million visitors. Tourists from Europe were the second largest group, accounting for 458,000 visitors.

As home to a number of the largest companies in the world and the site of many leading firms in key emerging sectors, Texas will continue to attract travelers for business purposes. Conventions are another important source of work-related visits. Texas has approximately 4,600 hotel properties and about 392,000 rooms to accommodate all the visitors to the state.

The top tourist attractions in Texas, according to a 2010 survey, included the Alamo, Galveston Island, the Hill Country, the State Capitol, San Marcos Outlet Mall, Six Flags Over Texas, Sea World, Fort Worth Zoo, Paseo del Rio (San Antonio River Walk), Schlitterbahn, Texas State Fair, Rangers Ballpark in Arlington, Six Flags Fiesta Texas, Fort Worth Stockyards and South Padre Island.

Most visitors spent several days and hundreds of dollars during their visits to Texas. In terms of activities for Texas visitors, dining was listed the most popular with 33 percent of visitors, followed by shopping at 25 percent, entertainment at 22 percent and sightseeing at 12 percent.

The beneficiaries of this economic stimulus include not only the obvious hotels, airlines, malls and theme parks. Travel-related industries are integrally linked to many others, which also profit from travelers to the state.

Tourism is a very important contributor to the Texas economy.

Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.